Alibaba Group has reshuffled its senior ranks to ensure its flagship domestic e-commerce and cloud computing operations receive ample resources to compete at a time of technological upheaval.
The internet juggernaut said on Wednesday that Eddie Wu will lead its biggest revenue generator, the Taobao and Tmall Group, adding to his roles as Group CEO and head of Alibaba Cloud.
The Taobao and Tmall Group houses the world’s largest digital retail business in GMV terms, spanning its eponymous marketplaces and fledgling enterprises such as Xianyu, a second-hand resale site. Meanwhile, Alibaba Cloud is the group’s command center for cloud computing and artificial intelligence.
“Eddie’s leadership of both Alibaba Cloud and TTG will ensure total focus on, and significant and sustained investment in, our two core businesses of cloud computing and e-commerce, as well as enabling TTG to transform through technology innovation,” said Alibaba Group’s Chairman Joe Tsai in an email to staff.
Eddie has clarified Alibaba Group’s strategic focus and priorities. He navigated tough trade-offs and made difficult but necessary decisions
Alibaba’s war chest had swollen to $63 billion in net cash as of Sept. 30, which management has vowed to invest in growth.
“We believe the moves can further unlock synergies,” said analysts at brokerage Jefferies, including Thomas Chong, in a report on the management changes.
Tsai and Wu stepped into the roles of Alibaba Group’s Chairman and CEO respectively in September. Wu has since honed the group’s strategy and tasked Alibaba Cloud with pursuing public cloud products and services.
“Since taking over as Group CEO three months ago, Eddie has clarified Alibaba Group’s strategic focus and priorities. He navigated tough trade-offs and made difficult but necessary decisions,” said Tsai.
Wu is replacing Trudy Dai as CEO of Taobao and Tmall, effective immediately. Dai is one of Alibaba’s original 18 founders and recently recast the e-commerce giant’s guiding tenets, placing users first, growing its marketplace ecosystem, and innovating by leveraging advances in AI. The consumer-to-consumer app Taobao was given prominence as it celebrated its 20th anniversary.
Taobao and Tmall are already embracing AI, launching 10 free AI-powered features for merchants this year, and a generative AI chatbot named Wenwen to answer shoppers’ queries.
“Trudy has been on the business front lines for over two decades and made significant contributions towards the founding and development of the company,” said Tsai in the email.
Reboot
Alibaba undertook its biggest-ever reorganization in March in a bid to unlock shareholder value and free up its six major business groups and other investments to compete more effectively in markets from delivery services to entertainment.
Offsetting this centrifugal force, Wu and Tsai see their roles as balancing the short-term goals of Alibaba’s business units against opportunities for long-term value creation. They have set themselves a target of lifting its return on invested capital into the double digits over the next few years, from a lowly single digit as of last fiscal year.
As Wu consolidates his leadership of Taobao and Tmall Group and Alibaba Cloud, both will remain independent entities under the aegis of the holding company.
Advances in AI are creating challenges as well as opportunities for value creation. When Wu laid out his vision for Alibaba he stressed the deep convergence and flywheel effect of AI plus cloud computing as an impetus for growth.
To allow senior management to focus on rejuvenating core businesses, Alibaba said the board’s Capital Management Committee, chaired by Tsai, will form an asset management company to manage the operation of its non-core assets.
Alibaba’s balance sheet carries $67 billion in equity securities and other investments, as well as investment in equity method investees. It also owns operating businesses that tie up capital but generate low growth, so it is looking at creative ways to monetize their value.
Dai will move to assist in establishing the asset management company and put together a professional management team.
“This role will allow Trudy to play to her strengths and put her in a position to further contribute to the company,” said Tsai in the email.
This article has been updated to add context throughout
Read Eddie Wu’s plan for Alibaba here
